*

Yuan hits 14-month low amid worries about economy, US

tariffs

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Blue-chip index plunges nearly 3% despite fresh support

measures

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Chinese 30-year bond yield hits record lows, reflecting

investor

pessimism

(Updates throughout with stock, bond performance)

By Samuel Shen and Vidya Ranganathan

SHANGHAI/SINGAPORE, Jan 2 (Reuters) - The yuan hit a

14-month low on the first trading day of the year while Chinese

stocks and bond yields plunged, underscoring growing worries

about China's economy and a looming trade war before Donald

Trump begins his U.S. presidency this month.

After sliding 2.8% against the greenback in 2024 in its

third straight year of losses, the onshore yuan

kicked off the new year on the back foot, briefly weakening

below 7.3 per dollar for the first time since Nov. 3, 2023.

Meanwhile, China's stock benchmark tumbled

nearly 3% on Thursday to the lowest level in more than two

months, while long-dated Chinese yields slid to record lows.

China has implemented a raft of measures, including interest

rate cuts and looser rules around home buying to revive an

economy mired in a property crisis and persistent deflation, but

investors await more detailed and forceful measures to be

announced during the annual meeting of China's parliament in

March.

"I think from beginning of the year to March is more

uncertain because the next big policy event is March," Minyue

Liu, investment specialist for Greater China equities at BNP

Paribas Asset Management, said.

"Without solid macro data, macro delivery and big policy

announcement in the first two months, the market is likely to be

more volatile."

Thursday's market weakness came despite Chinese President Xi

Jinping vowing to implement more proactive policies to promote

growth in 2025, and as China's central bank kicked off a second

round of swap facility operations to bolster the stock market.

TARIFF THREAT

The onshore yuan fell to 7.31 per dollar at the market open.

However, trades for the dollar/yuan above 7.3 disappeared from

trading platforms later.

Responding to a Reuters request for comment, China's forex

market operator said both trading counterparties cancelled their

orders at 7.31 per dollar. The regulator did not say why the

orders were cancelled.

The cancellation shows that "authorities think keeping

the yuan stronger than the 7.3-per-dollar level at this stage is

reasonable", a trader at a Chinese bank said.

China needs to closely monitor U.S. policies under Trump and

adjust countermeasures accordingly, including yuan policies,

said the trader, who declined to be named.

The U.S. president-elect has threatened to impose fresh

tariffs on Chinese imports, keeping investors on edge about the

impact on yuan-denominated assets.

"It will be a challenging year for Asian currencies. Trump's

inauguration is in less than three weeks," wrote Alvin Tan, head

of Asia FX Strategy at RBC Capital Markets.

The pessimism was also reflected in China's stock and bond

markets on Thursday.

China's blue-chip CSI 300 Index closed down 2.9%,

logging its weakest New Year start since 2016, while Hong Kong

benchmark the Hang Seng dropped 2.2%.

Financial and tech shares led the

declines in China, falling 3.5% and 4.3%, respectively.

Chinese yields extended their decline into the new year,

reflecting investors' gloomy outlook and adding to depreciation

pressures on the yuan.

China's 30-year treasury yield fell below 1.9% to record

lows on Thursday, while the price of treasury futures, which

move inversely to yields, hit record highs.

"The bond market is the safe haven in a turbulent stock

market," an investment manager at a Shanghai-based brokerage

said.